Retail banking has been unrecognizably transformed by digitization. Everything from payments to basic credit products can now be availed digitally. However, when it comes to corporate or business banking, the pace has just not been the same. One good example of this is the process of trade which includes both vanilla open account transactions and trades secured via documentary credit products.

There have been some legitimate concerns, but those barriers are now being busted by new innovation drivers like eIDAS.

Here are the 5 main ways that eIDAS is boosting the digitization of trade:

One of the key aspects of eIDAS is the legal certainty that it provides. Many exporter/ importers who are a bit squeamish about using a fully digital process for international trade, cite legal uncertainty as one of their main areas of concerns. Qualified electronic signatures compliant to eIDAS have the same legal standing as their hand-written counterparts. This should ideally remove legal uncertainty for many traders as awareness about eIDAS spreads.

The risk of fraud is another main concern for traders who are looking to source goods or services from other countries. eIDAS enabled tools can significantly reduce this risk as participants on both sides of the trade can be confident of each other’s identity. So rather than relying on banks, electronic marketplaces or e-commerce websites etc, the buyer and seller can trade directly with a bit more confidence.

Incompatibility of their various technological solutions is another main concern for traders. They are worried about the complexity of integrating various software components as a result of moving away from their current practice to a fully digital solution. However, eIDAS has the advantage of being technologically neutral. It allows for several approaches to solve the same problem, using various techniques as long as the end result is the same and provides the guaranteed level of security. This means that traders would be able to choose from multiple solution providers and pick a system that meets their needs.

Cost is also a major consideration for adopting a new standard. This cost is in the form of new systems, additional training and so on. The way I see it is that having a pan-European system will slowly end up reducing costs significantly. There will be a lot of solution providers competing to get business and this would lead to better priced products. As the adoption rate increases, and eIDAS compatibility becomes more of a core infrastructure, it would become easier to use it just like it happened with something like email a couple of decades ago.

Cross compatibility with other market participants, vendors etc has also been a concern preventing adoption of digital trade. Companies are concerned that even if they adopt a new system, others may not be willing to do so, and they might end up having to operate multiple parallel business processes. eIDAS reduces this risk significantly since it would standardize a great many core requirements of digital trade. There has also been a focus on the hub and spoke model for promoting eIDAS – which means that a large local company acts as the hub and early adopter of eIDAS and then spreads the necessary information to its various vendors and partners. This model addresses the compatibility concern well.

REGULATION (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (2016), by the European Parliament and the European Council

Proposal for a REGULATIONconcerning the respect for private life and the protection of personal data in electronic communications and repealing Directive 2002/58/EC (Regulation on Privacy and Electronic Communications), (2017), by the European Parliament and the European Council